What happens to the cash receipts account when services or goods are sold?

When services or goods are sold, the cash receipts account reflects an increase in cash as transactions are recorded. This is recorded as a debit to the cash account, showing that the business has received cash. In accounting terminology, a debit represents an increase in asset accounts, such as cash.

Therefore, when a sale occurs and cash is received, the cash receipts account will indeed show an increase through debits. The impact on other accounts, such as revenue or sales accounts, would typically reflect a corresponding credit to represent the increase in revenue. However, regarding the cash receipts account specifically, the fundamental accounting principle supports that debits increase asset accounts, which includes cash when services or goods are sold.